S&P 500, Dow retreat from record highs on Home Depot’s dull forecast

(Reuters) – The S&P 500 and the Dow Jones indexes slipped from record levels on Tuesday as dour forecasts from Home Depot and Kohl’s eroded confidence on the strength of U.S. consumer spending ahead of the all-important holiday shopping season.

A trader works on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 18, 2019. REUTERS/Brendan McDermid

The tech-heavy Nasdaq .IXIC rose 0.24%, supported by gains in shares of Microsoft Corp (MSFT.O), Facebook Inc (FB.O) and Broadcom Inc (AVGO.O).

Home Depot Inc (HD.N) fell 5.3% and was the top drag on the benchmark S&P 500 and blue-chip Dow after the No.1 U.S. home improvement chain cut its 2019 sales forecast for the second time this year.

Kohl’s Corp (KSS.N) slumped 18.6% as the department store operator slashed its annual profit forecast after falling short of quarterly comparable sales and earnings estimates.

“At the moment the consumer sentiment is still strong but that doesn’t mean it is going to reflect in every retailer’s earnings,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Other retail stocks also fell, driving the S&P 500 retail index .SPXRT down 1.06%. Investors will now watch out for earnings reports from Lowe’s Cos Inc (LOW.N), Target Corp (TGT.N) and Nordstrom Inc (JWN.N) among others later this week for clarity on consumer spending.

Eight of the 11 major S&P 500 sectors were lower, with the consumer discretionary index’s .SPLRCD 0.79% drop weighing the most.

Expectations of a U.S.-China trade deal and a largely better-than-expected third-quarter corporate earnings season have fueled a Wall Street rally over the past few weeks, with the S&P 500 setting new records almost every day.

“Markets have probably risen a little too far … so it is no surprise that we are seeing some pause here,” Frederick said.

Market participants are, however, worried that an ongoing U.S. impeachment inquiry into President Donald Trump would weigh on efforts to end the prolonged trade war.

At 1:05 p.m. ET, the Dow Jones Industrial Average .DJI was down 112.12 points, or 0.40%, at 27,924.10, while the S&P 500 .SPX was down 2.89 points, or 0.09%, at 3,119.14.

The Nasdaq Composite .IXIC was up 20.13 points, at 8,570.06.

Investors will look to make sense of the Fed’s monetary policy stance when the central bank releases on Wednesday minutes from the latest policy meeting, in which it cut interest rates for the third time this year.

Among other stocks, AT&T Inc (T.N) fell 4.3% as MoffettNathanson downgraded the U.S. wireless carrier to “sell” from “neutral”.

Chipmaker Broadcom rose 2.3% following a Morgan Stanley upgrade to “overweight” from “equal-weight”.

Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and by a 1.68-to-1 ratio on the Nasdaq.

The S&P index recorded 38 new 52-week highs and two new lows, while the Nasdaq recorded 86 new highs and 91 new lows.

Reporting by Arjun Panchadar and Agamoni Ghosh in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila

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